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DECISION No.14/2000/QD-BXD OF JULY 20, 2000 PROMULGATING INVESTMENT AND CONSTRUCTION CONSULTANCY EXPENSE NORMS

THE MINISTER OF CONSTRUCTION

Pursuant to the Government�s Decree No.15/CP of March 2, 1993 defining the tasks, powers and State management responsibilities of the ministries and ministerial-level agencies;

Pursuant to the Government�s Decree No.15/CP of March 4, 1994 defining the functions, tasks, powers and organizational structure of the Construction Ministry.

Pursuant to the Government�s Decree No.52/1999/ND-CP of July 8, 1999 promulgating the Regulation on Investment and Construction Management and Decree No.12/2000/ND-CP of May 5, 2000 amending and supplementing a number of articles of the Regulation on Investment and Construction Management issued together with the Government�s Decree No.52/1999/ND-CP of July 8, 1999.

At the proposal of the director of Construction Economics Institute,

DECIDES:

Article 1.- To issue together with this Decision the investment and construction consultancy expense norms.

Article 2.- This Decision replaces the Construction Minister�s Decision No.45/1999/QD-BXD of December 2, 1999 promulgating the investment and construction consultancy expense norms and takes effect for uniform implementation throughout the country 15 days after its signing.

Article 3.- The ministries, the ministerial-level agencies, the agencies attached to the Government and the People�s Committees of the provinces and centrally-run cities shall have to implement this Decision.

Minister of Construction
NGUYEN MANH KIEM

INVESTMENT AND CONSTRUCTION CONSULTANCY EXPENSE NORMS

(Issued together with the Construction Minister�s Decision No.14/2000/QD-BXD of July 20, 2000)

PART I: GENERAL PROVISIONS AND APPLICATION GUIDANCE

1. Investment and construction consultancy expense norms prescribed in this document (hereinafter called consultancy expense norms for short) are the maximum expense levels for carrying out the consultancy work, which serve as basis for determination of consultancy expenses in the total investment amounts and total cost estimates, evaluation of bids, selection of consultants and signing of consultancy contracts in case of bidder appointment.

2. Objects and scope of application of consultancy expense norms:

2.1. Objects of investment and construction consultancy work include:

- Projects; mini-projects; component projects;

- Bidding packages of projects (mini-projects, component projects) under the approved bidding plans;

2.2. Scope of application: Projects invested with the following capital sources:

- The State budget capital;

- The State-guaranteed credit capital and the State�s development investment credit capital;

- The development investment capital of State enterprises.

2.3. The consultancy expenses for foreign direct investment projects (under the Law on Foreign Investment in Vietnam) shall be agreed upon by the contracting and consulting parties. Where the project consultancy is provided by Vietnamese consulting organizations, the expenses therefor shall be agreed upon by concerned parties according to international practices, which, if applying the norms prescribed in this document, shall not be twofold lower.

3. This document prescribes consultancy expense norms for some following jobs:

3.1. Elaboration of pre-feasibility study reports;

3.2. Elaboration of feasibility study reports;

3.3. Elaboration of investment reports;

3.4. Appraisal of investment projects, technical designs or total cost estimates (in case of hiring consultants or consulting organizations to perform these jobs);

3.5. Compilation of bidding dossiers for construction and installation, as well as analysis and evaluation of construction and installation bids;

3.6. Compilation of supplies and equipment procurement bidding dossiers, as well as the analysis and evaluation of supplies and equipment procurement bids;

3.7. Supervision of project construction and equipment installation.

For other consultancy jobs for which the expense norms have not been provided, the expenses therefor shall be determined under the guidance at Point 13 of this document.

The contents and products of each consultancy job mentioned above shall comply with the corresponding provisions in the following documents:

- Jobs prescribed at Points 3.1; 3.2 and 3.3 shall comply with the guidance of the Ministry of Planning and Investment;

- Jobs mentioned at Point 3.4 shall comply with the provisions of the Investment and Construction Management Regulation issued together with the Government�s Decree No.52/1999/ND-CP of July 8, 1999; the Government�s Decree No.12/2000/ND-CP of May 5, 2000 amending and supplementing a number of articles of the Investment and Construction Management Regulation issued together with the Government�s Decree No.52/1999/ND-CP of July 8, 1999 and documents guiding the implementation thereof, issued by the Ministry of Planning and Investment and the Ministry of Construction;

- Jobs mentioned at Points 3.5 and 3.6 shall comply with the Bidding Regulation issued together with the Government�s Decree No.88/1999/ND-CP of September 1st, 1999; Decree No.14/2000/ND-CP of May 5, 2000 amending and supplementing a number of articles of the Bidding Regulation issued together with Government�s Decree No.88/1999/ND-CP of September 1st, 1999, and the Planning and Investment Ministry�s Circular No.04/2000/TT-BKH of May 26, 2000 guiding the implementation of the Bidding Regulation issued together with the Government�s Decree No.88/1999/ND-CP of September 1st, 1999;

- Jobs mentioned at Point 3.7 shall comply with the Construction Ministry�s guidance on construction project quality control.

4. The investment and construction consultancy expense norms will cover: wages, social and medical insurance premiums, trade union fees, costs of materials, machinery and equipment, managerial costs and pre-calculated taxable incomes.

Where a consulting organization has to buy insurance of other types as required for the performance of project work undertaken by itself, these insurance expenses shall be added to the total consultancy expenses in the contract signed between the contracting and consulting parties.

5. The consultancy expense norms are determined according to project groups as follows:

- Group I: Projects on mining; metallurgy; chemicals; mechanical engineering; electricity; construction materials; light industry; petroleum depots; oil refining and petrochemical projects; explosives and explosive materials depots.

- Group II: Projects on water supply and drainage; oil pipelines; power transmission lines; transformer stations; postal communication; signaling; lighting; and warehouse projects other than those of Group I.

- Group III: Projects on agriculture; aquatic resources; forestry; irrigation

- Group IV: Traffic projects on: railways; land roads; runways, take-off and landing strips; airfields; bridges; traffic junctions, drift signals; tunnels; ferry-landings; river-ports; seaports; water projects; railway stations and other traffic projects.

- Group V: Civil projects on: dwelling houses; hotels; cultural and educational works; healthcare, physical training and sports; trade and services; working buildings; offices; headquarters and other public works.

6. The consultancy expense norms are prescribed according to the project scale and calculated in percentage (%) of the value of each consultancy job. More concretely:

6.1. The expense norms for elaboration of pre-feasibility study reports (3.1) shall be calculated in percentage (%) of the project construction and installation as well as equipment value (without VAT) in the approved pre-feasibility study reports.

6.2. The expense norms for elaboration of feasibility study reports (3.2); elaboration of investment reports (3.3), and appraisal of investment projects (3.4) shall be calculated in percentage (%) of the project construction and installation as well as equipment value (without VAT) in the approved feasibility study reports (or investment reports).

6.3. The consultancy expense norms for performance of such jobs as appraisal of technical designs and/or total cost estimates (3.4); compilation of bidding dossiers for construction and installation as well as analysis and evaluation of bids therefor (3.5); supervision of project construction and equipment installation (3.7) shall be calculated in percentage (%) of the construction and installation cost estimate value according to projects (component projects or mini-projects) or project items in bidding packages (without VAT), based on the approved total cost estimates (cost estimates).

6.4. The expense norms for compilation of supplies and equipment procurement bidding dossier as well as the analysis and evaluation of bids therefor (3.6) shall be calculated in percentage (%) of the projects� supplies and equipment cost-estimate value (without VAT), based on the approved total cost estimates.

7. Where the investment projects use second-hand supplies and/or equipment, the values mentioned at Point 6 (to serve as basis for determination of the consultancy expense norms) shall be calculated according to the value of the corresponding brand-new supplies and/or equipment. These values must be accepted by the agencies approving technical designs and total cost estimates as prescribed for projects.

8. Determination of investment and construction consultancy expenses:

8.1. The expense for each investment and construction consultancy job without VAT shall be determined according to the following general formula:

Ci= Gi x Ni (1)

in which:

- Ci: is the expense for consultancy job No.i; calculation unit: value;

- Ni: is the expense norm for consultancy job No.i defined in Part II of this document; calculation unit: %. Where the Ni interpolation is required, it shall comply with the guidance at Point 9 of this document.

- Gi: is the corresponding value (without VAT) used to calculate the expense for consultancy job No.i according to the provisions at Point 6 and Part II of this document. Where the value defined at Point 6 is not available, the investor and concerned parties shall agree upon the temporarily calculated Gi value. Where the Gi values are already available as prescribed, the consultancy expense shall be determined officially. Pending such official determination, the expenses advanced to parties that have performed the consultancy shall not exceed 70% of the consultancy expense amount determined according to the above-mentioned temporarily calculated Gi.

8.2. The expense for each consultancy job with VAT: shall be calculated according to the provisions at Point (8.1) plus the corresponding VAT amount. The VAT rate(s) for consultancy job(s) shall comply with the current regulations.

8.3. Table 4, Part II of this document prescribes the maximum expense limits for cases of hiring consultants or consulting organizations to appraise investment projects, technical designs and/or total cost estimates. Consulting organizations that appraise the total cost estimates must have full professional capability for norms, unit prices and construction cost estimates. Particularly for cases where only experts are hired to appraise the above-mentioned jobs, the expense therefor shall be determined on the basis of the draft expenses (the contents of the draft expenses for hiring experts shall comply with the guidance in the Appendix to this document) and submitted to the authority competent to approve technical designs and total cost estimates for approval. The expense level for hiring appraising experts shall not exceed 60% of the above-prescribed expense levels.

8.4. The consultancy expense norm for supervision of project construction and equipment installation shall strictly comply with the construction duration inscribed in the investment decision. Where the supervision duration is prolonged (not by the supervision consulting party), thus increasing the expense for supervision of the project construction and equipment installation against the norm, the supervision consulting party shall be allowed to calculate this increased expense amount (correspondingly to the prolonged supervision time) according to the following general formula:

C

d

Ck= ------------- x TGk (2)

TGd

In which:

Ck: is the expense for supervision of project construction and equipment installation that needs to be additionally calculated for the prolonged supervision duration; calculation unit: value;

Cd: is the expense for supervision of project construction and equipment installation for the prescribed supervision duration (calculated according to the provisions of this document); calculation unit: value;

TGd: is the prescribed supervision duration; calculation unit: month;

TGk: is the prolonged supervision duration; calculation unit: month.

9. Where the consultancy expense norm interpolation is required, the following general formula shall apply:

Nib � Nia

Nit = Nib � -------------------- x (Git � Gib) (3)

Gia � Gib

in which:

+ Nit: is the expense norm for consultancy job No.i according to the to-be calculated value; calculation unit: %;

+ Git: is the value of consultancy job No.i for which the expense norm should be calculated; calculation unit: value;

+ Gia: is the approximate value higher than the value for which the norm must be calculated (prescribed in Part II of this document); calculation unit: value;

+ Gib: is the approximate value lower than the value for which the norm must be calculated (prescribed in Part II of this document); calculation unit: value;

+ Nia: is the expense norm for consultancy job No.i corresponding to Gia (prescribed in Part II of this document); calculation unit: %;

+ Nib: is the expense norm for consultancy job No.i corresponding to Gib (prescribed in Part II of this document); calculation unit: %;

10. Where the investor or project management board is fully qualified and allowed to concurrently perform a number of investment and construction consultancy jobs according to current regulations, such investor or project management board shall enjoy funding for performance of such consultancy jobs according to the draft expenses already approved by the agency approving technical designs and total cost estimates, which, however, must not exceed 60% of the consultancy expense norms prescribed for the corresponding jobs.

Where investors have their dependent investment-construction consulting organizations (including design consultancy), they shall be eligible for funding to cover all expenses prescribed in this document.

11. When participating in the consultancy selection, consulting organizations shall have to make expense estimates for performance of consulting jobs according to the bidding dossiers. These estimates shall serve as basis for selection of the bid-winning consultancy organizations and conclusion of contracts for performance of consulting jobs. The prices for contract conclusion must not be higher than those calculated according to the consultancy expense norms prescribed in this document.

12. The consultancy expense norms for a number of consulting jobs of projects in the socio-economic development program for mountain, deep-lying and remote communes meeting with exceptionally difficult conditions under the Prime Minister�s Decision No.135/1998/QD-TTg of July 31, 1998 and the program on building commune clusters in high-mountainous areas under the Prime Minister�s Decision No.197/1999/QD-TTg of September 30, 1999 (program 135 for short) such as elaboration of investment reports; supervision of project construction and equipment installation shall be adjusted as follows: construction projects in mountainous and border areas shall apply the adjusted coefficient of 1.2; construction projects in island areas shall apply the adjusted coefficient of 1.3, as compared to the norms prescribed in this document.

13. Determination of expenses for other investment and construction consulting jobs:

13.1. The construction survey expense is calculated on the basis of the construction survey unit prices set by the People�s Committees of the provinces and centrally-run cities and the volume of construction survey. Pending the issuance of the survey unit prices by the People�s Committees of the provinces and centrally-run cities, the current survey unit prices shall still apply.

- The construction survey unit prices are determined on the basis of the norms for construction survey cost estimates and the Construction Ministry�s circular(s) guiding the setting and management of construction survey unit prices.

13.2. The project designing expense: shall comply with the guidance on construction project designing expense norm.

13.3. The project management expense: shall comply with the guidance on the expense for project management boards.

13.4. The expense for investment and construction consulting jobs such as:

- After-test acceptance of projects by the State Council for Testing and Acceptance;

- Consultancy on construction legislation and economic contracts;

- Setting of the project unit prices for projects with separate unit prices;

- Compilation of bidding dossiers and evaluation of bids for consultancy;

- Compilation of bidding dossiers and evaluation of bids, selection of partners for project implementation;

- Inspection of the construction project quality (if any); and

- Other consulting jobs,

shall be determined by making the expense estimates and submitting them to authorities competent to approve technical designs and total cost estimates for approval (the contents of the expense estimates for consultancy shall comply with the guidance in the appendix to this document).

Projects with value higher than that prescribed in this document must be reported to the Ministry of Construction for guidance on the method of determining the investment and construction consultancy expense norms.

APPENDIX GUIDING THE MAKING OF CONSULTANCY EXPENSE ESTIMATES

Ordinal number

Contents of expenses

Exposition of expenses

In cash (VND)

1

Materials expense:

Volume x unit price

- Paper

- Stationery...

. . . . .

2

Labor-hiring expense:

- Wages and wage allowances

+ Chief consultant

Work x unit price

+ Engineer A...

. . . . .

3

Machinery and equipment expense:

- Computers

. . . . .

- Other machinery (equipment)

. . . . .

4

General expenses

70% x (2)

5

Pre-calculated taxable income

6% x (1+ 2 + 3 + 4)

6

Output VAT

VAT rate prescribed for consultancy work x (1+ 2 + 3 + 4 + 5)

Total:

Notes: The draft expenses for hiring appraising experts shall be determined on the basis of the assigned appraisal work volume; the current wage regime; the stationery expense and a number of other expenses.

PART II: TABLES OF INVESTMENT AND CONSTRUCTION CONSULTANCY EXPENSE NORMS

A. EXPENSES CALCULATED IN PERCENTAGE (%) OF THE PROJECT CONSTRUCTION, INSTALLATION AND EQUIPMENT VALUE

Table 1

(Continued file Og-32Tab)

A. EXPENSES CALCULATED IN PERCENTAGE (%) OF THE PROJECT CONSTRUCTION, INSTALLATION AND EQUIPMENT VALUE

Table 1

Project group

Job description

Construction, installation and equipment value without vat (billion VND)

I

< 1

1

5

15

25

50

100

200

500

1,000

=2,000

1. Elaboration of pre-feasibility study reports

0.068

0.053

0.044

0.031

0.019

2. Elaboration of feasibility study reports

0.790

0.719

0.575

0.489

0.388

0.288

0.244

0.201

0.173

0.144

3. Elaboration of investment reports

0.557

II

1. Elaboration of pre-feasibility study reports

0.045

0.035

0.029

0.020

0.012

2. Elaboration of feasibility study reports

0.396

0.360

0.264

0.240

0.192

0.156

0.121

0.096

0.084

0.072

3. Elaboration of investment reports

0.323

III

1. Elaboration of pre-feasibility study reports

0.046

0.036

0.030

0.021

0.013

2. Elaboration of feasibility study reports

0.454

0.413

0.303

0.275

0.220

0.179

0.139

0.110

0.096

0.083

3. Elaboration of investment reports

0.336

IV

1. Elaboration of pre-feasibility study reports

0.042

0.033

0.028

0.019

0.011

2. Elaboration of feasibility study reports

0.380

0.345

0.253

0.230

0.184

0.150

0.116

0.092

0.081

0.069

3. Elaboration of investment reports

0.309

V

1. Elaboration of pre-feasibility study reports

0.0621

0.0483

0.0414

0.029

0.017

2. Elaboration of feasibility study reports

0.462

0.420

0.336

0.276

0.227

0.168

0.143

0.118

0.101

0.086

3. Elaboration of investment reports

0.216

A number of specific provisions for Table 1:

- The expense for elaboration of investment reports shall be calculated according to the prescribed norm but must not be under 1,000,000 VND.

B. EXPENSES CALCULATED IN PERCENTAGE (%) OF THE PROJECT CONSTRUCTION AND INSTALLATION VALUE

Table 2

Project group

Job description

Construction and installation value without vat (billion VND)

<= 0.5

1

5

15

25

50

100

200

500

=1,000

I

1. Compilation of construction and installation bidding dossiers and analysis, evaluation of construction and installation bids

0.396

0.330

0.300

0.240

0.160

0.100

0.070

0.045

0.033

0.023

2. Supervision of project construction and equipment installation

1.782

1.485

1.430

1.342

1.188

1.008

0.787

0.616

0.500

0.330

II

1. Compilation of construction and installation bidding dossiers and analysis, evaluation of construction and installation bids

0.277

0.231

0.210

0.168

0.115

0.080

0.050

0.030

0.023

0.016

2. Supervision of project construction and equipment installation

1.240

1.034

0.990

0.911

0.814

0.704

0.554

0.432

0.346

0.231

III

1. Compilation of construction and installation bidding dossiers and analysis, evaluation of construction and installation bids

0.263

0.219

0.200

0.160

0.109

0.077

0.045

0.029

0.022

0.015

2. Supervision of project construction and equipment installation

0.954

0.793

0.739

0.661

0.583

0.446

0.275

0.216

0.163

0.109

IV

1. Compilation of construction and installation bidding dossiers and analysis, evaluation of construction and installation bids

0.246

0.205

0.186

0.149

0.102

0.070

0.043

0.027

0.020

0.014

2. Supervision of project construction and equipment

0.886

0.740

0.686

0.621

0.546

0.421

0.254

0.202

0.156

0.102

V

1. Compilation of construction and installation bidding dossiers and analysis, evaluation of construction and installation bids

0.331

0.276

0.240

0.204

0.138

0.090

0.060

0.036

0.024

0.019

2. Supervision of project construction and equipment installation

1.505

1.254

1.210

1.135

0.977

0.834

0.664

0.519

0.392

0.275

C. EXPENSES CALCULATED IN PERCENTAGE (%) OF THE PROJECT EQUIPMENT VALUE

Table 3

Project group

Job description

Construction and installation value without vat (billion VND)

<= 0.5

1

5

15

25

50

100

200

500

=1,000

I

Compilation of for supplies and equipment procurement bidding dossiers as well as analysis and evaluation of bids therefor

0.266

0.222

0.204

0.180

0.156

0.102

0.066

0.057

0.048

0.033

II

Compilation of supplies and equipment procurement bidding dossiers as well as analysis and evaluation of bids therefor

0.187

0.156

0.144

0.126

0.108

0.072

0.048

0.041

0.035

0.023

III

Compilation of supplies and equipment procurement bidding dossiers as well as analysis and evaluation of bids therefor

0.168

0.140

0.130

0.113

0.097

0.065

0.043

0.037

0.031

0.021

IV

Compilation of supplies and equipment procurement bidding dossiers as well as analysis and evaluation of bids therefor

0.157

0.131

0.121

0.106

0.091

0.061

0.040

0.035

0.029

0.020

V

Compilation of supplies and equipment procurement bidding dossiers as well as analysis and evaluation of bids therefor

0.223

0.186

0.168

0.156

0.132

0.084

0.054

0.048

0.041

0.028

A number of specific provisions for Table 3:

- The expense for compilation of supplies and equipment procurement bidding dossiers as well as analysis and evaluation of bids therefor is proportioned as follows:

+ 60%-70%, for compilation of supplies and equipment procurement bidding dossiers;

+ 40-30%, for analysis and evaluation of bids for supplies and equipment procurement.

- The expense for compilation of bidding dossiers as well as analysis and evaluation of bids for supplies and equipment procurement shall be calculated according to regulations but must not be under 1,000,000 VND.

D. EXPENSE NORMS FOR HIRING EXPERTS OR CONSULTING ORGANIZATIONS TO APPRAISE INVESTMENT PROJECTS; TECHNICAL DESIGNS OR TOTAL COST ESTIMATES

Table 4

Job description

Project

group

Construction, installation and equipment value without vat (billion VND)

1. Appraisal of investment projects

I- V

<= 0.5

1

5

15

25

50

100

200

500

=1,000

=2,000

0.0350

0.0322

0.0266

0.0238

0.0210

0.0175

0.0140

0.0105

0.0067

0.0035

CONSTRUCTION AND INSTALLATION VALUE WITHOUT VAT (BILLION VND)

2. Appraisal of technical designs

I

0.1436

0.1197

0.1071

0.0945

0.0630

0.0553

0.0441

0.0315

0.0221

0.0158

0.0087

II

0.0983

0.0819

0.0756

0.0630

0.0441

0.0392

0.0309

0.0221

0.0158

0.0113

0.0063

III; IV

0.0932

0.0781

0.0718

0.0599

0.0422

0.0371

0.0296

0.0208

0.0151

0.0107

0.0057

V

0.1344

0.1008

0.0945

0.0819

0.0536

0.0469

0.0378

0.0271

0.0158

0.0139

0.0077

3. Appraisal of total cost estimates

I

0.1260

0.1050

0.0910

0.0700

0.0476

0.0413

0.0315

0.0252

0.0161

0.0133

0.0070

II

0.1512

0.1260

0.1120

0.0840

0.0560

0.0490

0.0371

0.0308

0.0231

0.0161

0.0083

III; IV

0.1057

0.0882

0.0784

0.0588

0.0406

0.0392

0.0259

0.0210

0.0161

0.0112

0.0067

V

0.1008

0.0840

0.0742

0.0560

0.0385

0.0371

0.0245

0.0203

0.0154

0.0105

0.0061

A number of specific provisions for Table 4:

1. The above-mentioned expense norms for appraisal of technical designs and total cost estimates shall be adjusted in decrease according to K coefficient in case of using typical designs or repeated designs in a number of project groups or in a project. More concretely:

a/ Typical designs:

- The first project: k= 0.36

- The second project onward: k= 0.18

b/ Repeated designs:

- The first project: k= 1

- The second project: k= 0.36

- The third project onward: k= 0.18

2. The expense for appraisal of investment projects, technical designs and total cost estimates shall be calculated according to the prescribed norms but must not be under 500,000 VND.-

(Re-open File: Og-32_00)